Issue
Morris is a retailer of electrical goods. He advertises a special in the local newspaper being “108cm flat screen plasma televisions” at the very low price of RM2,000.00. In fact he only has one in stock. The advertisement was simply a trick to get potential customers to visit his shop. Danish and Mohandwas very dissatisfied when they could not get the TVs as advertised. They would like to take an action against Morris. Advise them.
A contract is a very significant term in the area of law. There is a separate law on this subject that is well known as “Contract Law.” There are some basic requirements that are necessary to be fulfilled in order to convert an agreement into the contract. These requirements are the following:
- There must be an offer made by an offeror and the same must be in knowledge of the offeree (Mann & Roberts, 2018).
- Offeree must have accepted the offer in it is original form i.e. without any modification or changes.
- In a valid Contract, Consideration must be there in between parties (Judicial Educational Center, 2018).
- It has held in the case of Chappell v Nestle[1960] AC 87 that consideration needs not to be accurate but this must be sufficient.
- There must be an intention of the parties to bind each other legally by the mean of a contract.
- Consent provided by offeree must be a free consent i.e.it must not be influenced by misrepresentation, undue influence or non-disclosure (owlgen, 2018)
All the above conditions are pre-requisites for a contract. In addition to this, there are also some other terms which are further defined in the report that are important aspects of this field. This is to state that liability and entitlements in a business transaction depend on the existence of a contract (Vitez, 2018). Hence, this is a crucial subject and needs to be study carefully.
In the given case scenario, Morris who is a retailer and deal in electronic goods has published an advertisement in a newspaper stating “108cm flat screen plasma televisions at the very low price of RM 2,000.00.” He did not mention anything further in the advertisement. As it has published in the newspaper, Danish and Mohand went to Morris’s shop and become disappointed when they did not get TV as shown in Newspaper. Here, the advertisement that Morris has published was not true itself and was a trick to get the potential clients to visit his shop. As mentioned that now, both of them i.e. Danish and Mohand wants to take an action against Morris.
A transaction merely remains an agreement until unless it has the entire characteristics that are necessary in order to make it a contract. Offer and acceptance are well-known and significant terms of a contract. These two are the basics elements of a contract.
It is to state that an offer is a proposal or promise to exchange a performance in favor of other (Burton & Eisenberg, 2008). An offer must be a legal one, it means subject matter, as well as the object of an offer, must not be invalid and illegal. In addition to this, an offer must be communicate to the offeree. An offer in a contract need not be in writing always; it can be communicate in the verbal mode to another party of the transaction (jifkins, 2017). Few elements are mentions there that are required to present in a valid offer. These factors are;-
- Communication- After the preparation, offer must communicate to the other person, who would then choose to accept or reject the same
- Intention- Intention of an offer must always be to bind other party legally. It also can say, that the transactions and agreement that becomes due in the course of love and affection cannot be treated as a valid offer in contract since they do not attract any legal liabilities to the parties (Smith, Baker & Edwards, 2018).
- Definite Terms- Terms of an offer must always be clear and no party of the contract should have any confusion about the identity of subject matter, price, or any other fact.
Rules
Hence, in this context, it is to state that offer in a contract is very basic element and without this, no acceptance can make and no contract can ever be develop.
Similarly, to offer, an acceptance is also an important element of a contract. Without acceptance, an offer cannot convert into an agreement (Sexton, 2016). As for a valid offer, there are some pre-requisite, similarly for acceptance also, some characteristics are mentioned. For a valid acceptance, it is necessary that the same must be free from undue influence, fraud, misrepresentation, or similar terms. Acceptance must communicate to the offeror. This is also to mention that acceptance must be for the original offer. If a person, to whom the offer has made, rather than accepting the offer, put some additional condition into it, then it will be treat as a counteroffer (Frey, 2015). Further, acceptance must submit within the prescribed time limit. Therefore, it is to state that in the course to declare a contract valid or invalid, the first validity of an acceptance must be check.
Except, offer and acceptance, there is another term named “Invitation to treat” that is highly significant to understand. Many of the times, it has noted that parties misunderstand the concept of Invitation to Treat and consider this an offer. To understand the difference between an offer and an Invitation to treat, the later term is need to be study.
Invitation to treat is an invitation for an offer. This is very general that sometimes an offeror does not make a direct offer to another party, but he/she make a free call to invite offers. As in return for an offer acceptance comes, in a similar manner, offers come in return of an Invitation to treat. An invitation to treat cannot get acceptance, as it is not an offer (Burrows, 2018). When a person comes to know about such an invitation, he/she need to propose an offer to the person who made such Invitation. Then after it is up to that person to accept or reject the offer. It can say that the person, who makes an invitation to offer and who accept the offer further are the same person in a contract.
Invitation to treat is simply an invitation to make an offer and does not bring any liability to the parties (Taylor, 2011). In a transaction where this factor exists, no liabilities get initiate until unless offer receives acceptance. In a contract, an invitation to treat is a very important term to understand. It has held in the case of Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401 that goods which are displayed on the shelf are just an invitation to treat not an offer. This is the reason why a general exhibition of good considers as Invitation to treat. Further, in the case of Fisher v Bell [1961] 1 QB 394 court has applied the statutory interpretation of the rules and terms. As earlier mentioned the pre-requisites of a valid offer, the same will not apply on Invitation to treat.
What is an offer?
An invitation to treat is a wider term. According to the decision given in the case of Partridge v Crittenden (1968) 2 All ER 425 it was held that invitation to treat includes advertisements and auctions. It often has noted that organizations and businesses publish advertisements to sell their products. People who want to buy that goods offer to the seller with a desirable consideration. After that, if the seller thinks the offer suitable, he/she accept the same. There are differences in between offer and invitation to treat that must be clear. As earlier mentioned that the invitation to treat does not bring any liability, an offer can attract the same if such offer gets a valid acceptance from the offeree (mytutor, 2018). Offer is the first step of a contract, whereas invitation to treat cannot consider as a part of a contract. In an invitation to treat, one is not liable to provide the exact quantity and quality of subject matter as mentioned. However, this is also to mention that in some of the cases, an invitation to treat can also be consider as an offer. It was held in the case of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Court of Appeal that, in some of the cases this general rule will not apply. Cases, where a person clearly mention that a particular act of another party will consider as the performance of the transaction; then invitation to treat will treat as offer and performance of another party will consider as acceptance of that offer.
In a conclusive manner, this can say that in general, an invitation to treat will not be consider an offer and this does not attract any legal liability to the person who made the same.
In the given case Morris, who is a retailer of electronic goods, has published an advertisement in the newspaper in which he has mentioned: “108cm flat screen plasma televisions at the very low price of RM 2,000.00”. It means he had the said televisions moreover, he was ready to sell the same at the mentioned price i.e. RM 2,000.00. In the given scenario, Morris did not mention anything further. As held in the case of Partridge v Crittenden that advertisement is a kind of Invitation to treat, so the action of Morris was an invitation to treat not an offer. As earlier stated in the rules section that for an offer, there must be a clarification about the subject matter of the offer, but in this case, Morris only mentioned that he has televisions, he did not mention anything about the conditions of televisions. In addition to this, for a valid offer, terms and conditions also need to be certain, but Morris only mentioned the price and general description of offered televisions. Communication of offer to offeree is also an important element but in the given case, offeree is not an identified person. By reviewing the entire case, this may stipulate that published advertisement was not an offer. Following are the highlights and reasons to justify the fact that the subjective advertisement was not an offer:
- Communication- For a valid offer, the same must be communicates to offeree. However, in the absence of offeree, this condition cannot get satisfy. As in the provided case also, Morris has not made an offer to a particular person, but he simply published in the newspaper.
- Definite Terms: – In the provided case, Morris has not mentioned any terms and conditions except pricing.
- Identification- Identification of subject matter is also an important element for a valid offer (Community Legal Information Centre, 2018). As in the provided case, Morris only stated 108cm flat screen plasma televisions. About which televisions he was taking. As mentioned above, it is clear that the advertisement that Morris published in newspaper was not an offer.
Acceptance
It is very common in contract law that without an offer, acceptance cannot be there (George & Korobkin, 2014). Morris did not make any offer, so there was no question of the fact that has someone accepted the offer or not. As earlier mentioned that an agreement is a combination of a valid offer and acceptance, in the studied case, neither offer was there nor acceptance. Morris has given the advertisement because he was a retailer and wanted people to visit his shop. The main motive behind the publishing of the advertisement was not the sale of televisions. After the above discussion, it is clear that the advertisement was an invitation to treat instead of an offer. As held in the case of Fisher v Bell that court applies statutory rules in such cases, so in the studied case, the advertisement will consider as an invitation to treat.
Invitation to treat is an act before the agreement and does not bring any liabilities to the parties. Danish and Mohand went to the Morris’shop to purchase the televisions but they did not get the same. The reason behind was that Morris only had one television left in his stock. He mentioned “televisions” in a newspaper advertisement and no one had reason to believe that only one piece left there. Morris in a way made a misstatement by not defining the actual circumstances. However, as invitation to treat is not an offer, so one can make any statement by making such invitation. Many of the times, people show various qualities of a particular thing in the exhibition but in actuality, that thing does not meet out with any of the quality. There could be the existence of an offer if Morris would have said that he is ready to sell a particular television to Danish and Mohand. Even in this circumstance, it would be necessary to give acceptance by Danish and Mohand to Morris. Nevertheless, in the studied case, Danish and Mohand did not provide any acceptance because offer itself was not existed. Morris knew the fact that he only has one television, yet he used the term “televisions.” In addition to this, he has mentioned the consideration he wanted to get in exchange of television. As held in the case of Chappell v Nestle consideration need not to be adequate, 2000RM was a valid consideration in this case. If to review in a combined perspective, the advertisement had only valid consideration as feature of a contract.
Invitation to Treat
Now, Danish and Mohand want to take an action against Morris, but it is to state that there was not any contract in between the parties. Morris did not personally approach to both the said person to come and show their response towards the advertisement. He made a public advertisement and this was open for public. Provisions of Carlill v Carbolic Smoke Ball Co cannot apply in this case. Morris has not mentioned that a particular act of a person will consider as acceptance. Nature of advertisement was of invitation to treat not of an offer. Danish and Mohand did not do any act that could treat as acceptance. Hence, this can state that no contract was there in between the parties.
Conclusion
After the required study of provided case, rules made thereof and related cases, it is concluded as in order to absence of a contract, Danish and Mohand cannot bring any action against Morris. The advertisement provided by Morris was merely an invitation to treat. Morris has not made any offer to anyone in the said transaction. Because of the absence of offer, acceptance could also not been there. As neither offer nor acceptance was there, no contract could be developed. In the invitation to treat, a person is not responsible to provide what he has mentioned. Since, no legal liability or obligation get create in invitation to treat, Morris was not bind to provide television to both of the person. Although Morris should not have use the word “televisions”, yet if he did so, then also no liability will attract to him. Morris has made a misstatement but cannot hold liable to breach a term of contract, as there was not any contract.
Parties of a transaction can held each other liable when one of them breaches any terms of the contract, but in the given case contract has not developed in between Morris and Danish as well as in between Morris and Mohand. Hence, this is to state that no one will get success if initiate any action against Morris.
References
Burrows, A. (2018). A Casebook on Contract. UK: Bloomsbury Publishing.
Burton, S. J., & Eisenberg, M.A. (2008). Contract Law: Selected Source Materials. United State: West.
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256
Community Legal Information Centre. (2018). What are the basic requirements for making a valid contract? Retrieved from: https://www.hkclic.org/en/topics/businessAndCommerce/setting_up_business_in_Hong_Kong/making_a_business_contract/q1.shtml
Fisher v Bell [1961] 1 QB 394
Frey, M.A. (2015). Essentials of Contract Law. USA: Cengage Learning.
George, T. E., & Korobkin, R. (2014). K: A Common Law Approach to Contracts. New York: Wolters Kluwer Law & Business.
Great Britain v Boots [1953] 1 QB 401
jifkins, J. (2017). Contracts don’t have to be in Writing to make them Binding. Retrieved from: https://onyxonlinelaw.com/contracts-dont-have-to-be-in-writing/
Judicial Educational Center. (2018). Elements Of A Contract. Retrieved from: https://jec.unm.edu/education/online-training/contract-law-tutorial/contract-fundamentals-part-2
Mann, R. A., & Roberts, B.S. (2018). Essentials of Business Law and the Legal Environment. (13th ed.). United State of America: Cengage Learning.
Mytutor. (2018). Explain the difference between offer and an invitation to treat. Retrieved from: https://www.mytutor.co.uk/answers/17497/A-Level/Law/Explain-the-difference-between-offer-and-an-invitation-to-treat
Owlgen. (2018). Define consent. When is consent said to be free? Retrieved from: https://www.owlgen.com/question/define-consent-when-is-consent-said-to-be-free
Partridge v Crittenden (1968) 2 All ER 425
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
Sexton, B. (2016). Contract Law- Offer & Acceptance. Retrieved from: https://www.allaboutlaw.co.uk/stage/study-help/contract-law-offer-acceptance
Smith, A., Baker, P., & Edwards, T. (2018). The Basics: Do you have a contract? Is there a binding agreement in place? Retrieved from: https://www.lexology.com/library/detail.aspx?g=dc947c6f-611a-4559-bdda-9d5554a46b4c
Taylor, A. (2011). Offer and acceptance online. Retrieved from: https://seqlegal.com/blog/offer-and-acceptance-online
Vitez, O. (2018). What is the I56mportance of Contracts to a Business? Retrieved from: https://smallbusiness.chron.com/importance-contracts-business-906.html
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